New Delhi: The government has cut the price of natural gas produced from old (legacy) fields for the first time in two years. This gas is mainly used to produce CNG for vehicles and PNG (piped cooking gas) for homes.
The price has been brought down from USD 6.75 to USD 6.41 per million British thermal units (mmBtu). This decision was shared through a notice from the Oil Ministry's Petroleum Planning and Analysis Cell (PPAC).
New gas pricing system started in April 2023
In April 2023, the government began using a new way to fix gas prices. This method links the price to 10 per cent of the average global crude oil import price. There is also a minimum price (USD 4) and a maximum price (USD 6.5) set to avoid too much fluctuation.
From April 2025, the price cap increased to USD 6.75. In April this year, the price as per the formula was USD 7.26, but the cap kept it at USD 6.75. In May, the price came to USD 6.93 but stayed capped.
Oil price drop helps lower gas rates
Oil prices dropped globally due to weak demand, and in May, the average crude oil price for India was around USD 64 per barrel. Based on this, the APM gas price has now been fixed at USD 6.41 per mmBtu for June 1 to June 30, 2025.
This price is based on Gross Calorific Value (GCV), which measures the energy content of the gas.
Lower gas price helps city gas companies
This cut in price will help city gas companies like Indraprastha Gas, Mahanagar Gas, and Adani-Total Gas, which were facing cost pressures. These companies use APM gas to provide CNG and PNG to customers.
About 60 per cent of their sales come from these two segments.
Gas from new wells also gets cheaper
ONGC, which produces gas from both old and new wells, will also charge less for gas from new wells in APM fields. These wells supply about 5 million standard cubic meters per day of gas.
The government had earlier allowed ONGC to charge more (12% of oil price) for gas from these new wells to cover drilling costs.
Other gas fields see slight rate drop
Gas from difficult fields like Reliance’s KG-D6 will now cost USD 10.04 per mmBtu for six months starting April 1. Earlier, it was priced at USD 10.16.
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